Craig v Revenue & Customs [2012] UKFTT 90 (TC) (27 January 2012)

Craig v Revenue & Customs [2012] UKFTT 90 (TC) (27 January 2012)

The appellant failed to prove that the sums invoiced by his limited company represented deductible expenses for the relevant tax year, as there was no evidence of services performed by the company during the period in question. The attempt to transfer income to the company for tax advantage was not supported by underlying records or credible evidence. The Revenue was justified in disallowing the deductions and apportioning them over three years.

Citation
[2012] UKFTT 90 (TC)
Parties
Appellant: William Craig; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
27 January 2012
Procedural Posture
Tax Appeal / First Tier Tribunal (tax), Substantive Decision on Appeal
Outcome
Appeal refused on the principal issue; decision in favour of the Revenue.
Legal Topics
Income Tax, Corporation Tax, Self Assessment, Deductible Expenses, Accruals Basis, Generally Accepted Accounting Practice, Tax Avoidance
Tax Law Accounting Law Income Tax Corporation Tax Self Assessment Deductible Expenses Accruals Basis Generally Accepted Accounting Practice +1 more

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Parties

William Craig

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal (tax), Substantive Decision on Appeal

Legal Issues

  1. 1 Whether sums invoiced by the appellant’s limited company to himself as a sole trader are deductible expenses for computing taxable profits for the relevant tax year
  2. 2 Whether services were actually performed by the company and, if so, when
  3. 3 Whether the computation of profits was in accordance with generally accepted accounting practice

Ratio Decidendi

The appellant failed to prove that the sums invoiced by his limited company represented deductible expenses for the relevant tax year, as there was no evidence of services performed by the company during the period in question. The attempt to transfer income to the company for tax advantage was not supported by underlying records or credible evidence. The Revenue was justified in disallowing the deductions and apportioning them over three years.

Court Disposition

Appeal refused on the principal issue; decision in favour of the Revenue.

Orders

  • Appeal on the principal issue (deductibility of £110,000 invoices) refused.
  • Agreement reached on unrecorded income and capital allowances in appellant’s favour; work in progress issue decided for Revenue.